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Netflix share price: where now as competition in streaming services heats up?

With Apple and Disney both launching new streaming services in November, Netflix has seen its share price slide as competition in the space heats up.

Netflix Source: Bloomberg

Over the last five trading sessions, Netflix stock has fallen by almost 10% to $265 per share with competition in streaming services set to heat up in November with the launch of Disney+ and Apple TV+.

Even Netflix’s CEO Reed Hastings admitted that Apple and The Walt Disney Company will usher in a ‘whole new world’ of streaming services later this year when talking at the Royal Television Society conference in Cambridge last week.

Streaming market not a zero-sum game

Over the next 12 months, Disney, Apple, WarnerMedia and NBCU will join the likes of Hulu, Amazon, BBC, Hotstar, YouTube, Netflix and others in offering streaming entertainment services.

‘The competition for winning consumers’ relaxation time is fierce for all companies and great for consumers,’ Netflix said in its second-quarter results.

However, Netflix has said that increased competition won't neccessarily lead to a zero-sum game that will eat into its share of the streaming market.

Bernstein Research analyst Todd Juenger seems to agree too, reiterating his buy rating for the stock and giving a 12-month price target of $450 a share.

‘The belief that new services will take market share from Netflix rests on an assumption that the services will compete with each other for a fixed number of potential subscribers. We don’t believe that’s true,’ Juenger wrote in a report to clients.

‘We do not believe the launch of additional SVOD [subscribtion video on-demand] services will cause existing Netflix subs to cancel, or future Netflix subs to not materialise.’

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Netflix focuses on original content

With competition among streaming service providers to acquire popular shows like Friends and The Office in a bid to attract consumers to their platforms, Netflix has gone a different route.

Instead, Netflix is ploughing significant amount of money into developing new original content like Breaking Bad sequel El Camino.

However, the most crucial factor in determining who comes out on top will likely be price. Netflix boasts more than 150 million subscribers worldwide all paying a hefty $13 per month – significantly higher than Apple or Disney at $5 and $7 respectively.

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